Steinhoff has been embattled in the past years. The situation now gets even more severe for the South African retailer.
The Johannesburg Stock Exchange (JSE) has fined Steinhoff International with a total of USD 818 K, which is well over ZAR 13 Mn.
According to Africa’s largest stock exchange, the retailer breached the bourse’s requirements by, for example, publishing false and misleading financial information.
JSE’s probe appears to reveal a trail of inaccuracies in Steinhoff’s affairs. The retailer’s usual results in 2016, 2015, and prior periods do not comply with international reporting standards.
Apparently, what is one of South Africa’s biggest accounting scandals adds to the pain Steinhoff passed through in recent years. More so, the company had to restate its prior years’ results in May 2019.
As such, its USD 1.6 Bn profit reported for 2016 has decreased to just over USD 280 Mn.
In 2017, Steinhoff nearly fell into a USD 7 Bn hole in its own accounts, resulting in a share head fall and the incursion of multiple lawsuits from its past partners and shareholders.
The retailer remains enmeshed in this scandal and has been struggled to wriggle off its effects.
The company admitted to the accounting irregularities, culminating in the loss of more than ZAR 200 Bn in its market capitalization. Since then, getting the business back on track has been slowed down by legal bumps.
In September 2019, Steinhoff was also fined a record-setting USD 91 Mn by the Financial Sector Conduct Authority for misrepresenting its finances to the market. Nevertheless, the company paid only USD 3.2 Mn to close the case.
Steinhoff, whose shares trade in both Johannesburg and Frankfurt, experienced a 98 percent wipeout of its share value. This was the aftermath of barraging litigation from the aggrieved shareholders and business partners, who were perhaps disgruntled by the firm’s conduct.
East African retail companies face debt issues. In Nigeria, the challenges include weak currencies, unstable economies, and inept supply chains. As a result, South African retailers are closing shop in other countries to focus only on home markets.
Meanwhile, an investigation into the firm’s directors will be carried out to ascertain the root cause of the irregularity.
Steinhoff’s involvement in these finance-related scandals seems to be a surprisingly new eventuality in the country’s retail space.
But, when it comes to business scandals, the scene in South Africa, there’s much to look at. Its biggest pharmacy chain, Clicks Group, was stormed with criticisms and protests, spurred by an offensive product ad on its website.
Help us build a narrative on African Business, Startups, Tech and Economy
Join us today to empower great story telling, one story at a time
Get Access to 20+ well researched and insightful African business stories monthly & unlimited access to Free-reads.
If you are a Corporate or a Student, please reach out to us for subscription at [email protected]